HKSAR v. LAM MEI NGAR

FAMC No 8 of 2015

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 8 OF 2015 (CRIMINAL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM CACC NO 9 OF 2014)

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REASONS FOR DETERMINATION

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Chief Justice Ma (giving the Reasons of the Appeal Committee):

1. On 29 January 2015, in a judgment handed down on that date, the Court of Appeal[1] dismissed the Applicant’s appeal following her conviction on a charge of fraud and three money laundering charges.[2]  After her trial, the Applicant was sentenced to 6½ years imprisonment for the fraud charge and 2½ years for the money laundering charges, both sentences to run concurrently.  Before us, the Applicant sought leave to appeal both on the ground that a point of great and general importance was involved, and on the substantial and grave injustice ground.  After hearing counsel[3], we dismissed the application, with our reasons for doing so to be handed down.

2. The point said to be of great and general importance was as follows: -

“Can the Court of Appeal dismiss an appeal by adopting a basis of conviction which is entirely different from the basis of conviction adopted by the Jury trial Court throughout the trial?”

3. Quite apart from the point that, as drafted, the question is only capable of being answered depending on the circumstances of any particular case, it will be apparent when we deal below with one of the matters going to the substantial and grave injustice ground that this question did not arise in the present application for leave to appeal.

4. Before dealing with the five matters going to the substantial and grave injustice ground, we should first identify the essential issues that were central to the case against Applicant on the fraud and money laundering charges.  Both Mr Khattak and Ms Lam were content to rely on the summary of the facts outlined by Yeung VP in the judgment of the Court of Appeal.  Both charges were connected.  In summary, the prosecution case against the Applicant (and the other defendants tried with her) was that a fraud was committed when a number of financial institutions made loans on the basis of 116 sales invoices which indicated on their face sales of goods from a seller called Hung Fu Trading Company (“Hung Fu”) to a company called Billion Up Limited (“Billion Up”). Applications for loans to the financial institutions were made by Billion Up as well as by another company, Kongsonic Electronics Company Limited (“Kongsonic”). In total, over a $100 million were lent on the strength of the invoices.  The case hinged on the fact that the invoices were not genuine in that there were never any sales of goods from Hung Fu to Billion Up.  The money laundering charges related to the monies that passed under these loan arrangements from the financial institutions to Hung Fu (purportedly the seller of goods), these monies eventually ending up in accounts held in the names of Billion Up and Kongsonic.

5. All the relevant companies referred to above were connected by their association with the Applicant.  The Applicant was a shareholder and director of both Billion Up and Kongsonic.  The Applicant’s link to Hung Fu was her husband, Hung Ching Kuen[4], whose sister was married to the daughter of the proprietor of Hung Fu.

6. The case for the defence was premised on the fact that the invoices did reflect genuine transactions. Although Hung Fu did not supply any goods to Billion Up or Kongsonic, it was only an agent who received the money on behalf of a Mainland supplier (Heng Qiang Sheng) which supplied goods to another company associated with the Applicant and her husband (Shenzhen Kongsonics Company).  The monies that passed from the financial institutions to Hung Fu and then eventually to Billion Up and Kongsonic, were intended (so it was asserted) to pay Heng Qiang Sheng.  The reason for such an elaborate scheme was somewhat obscure.

7. With this background, we now deal with the five matters said to support the Applicant’s submission that there has been a substantial and grave injustice in her trial.  In summary, they were as follows:-

(1)  Procedural irregularities took place at the trial when (a) the Judge did not discharge the Jury after it had been indicated to the Judge that the Jury had already reached a firm decision on the charges; and (b) the Judge had secret communications with the Jury after it had retired to consider the verdict against the Applicant.

(2)  The guilty verdict against the Applicant on the fraud charge was inconsistent with the acquittal of the Applicant’s husband and others on this charge.

(3)  The trial Judge ought to have ruled after the prosecution case that the Applicant had no case to answer.

(4)  The expert evidence of the prosecution, a forensic accounting expert, contained a number of inadmissible and prejudicial aspects in which she commented on certain of the defence documents as being suspicious, unusual or unreasonable.

(5)  Negative and highly prejudicial observations were made by the Judge in relation to two documents produced by the Applicant at trial.

8. The approach of the Court of Final Appeal to an appeal based on the substantial and grave injustice ground is well-known.[5] The threshold is a high one and applies only to cases where there has been such a serious departure from accepted norms that the Court can conclude there has been a substantial and grave injustice.  By definition, cases which fall within the ambit of this ground are likely to be rare and exceptional.  More often than not, this ground is misunderstood: it does not provide a second appellate tier for an examination of facts which the Court of Appeal may have been invited to undertake.  At the leave stage, an applicant has to demonstrate a reasonable argument bearing in mind the above principles.

9. Procedural irregularities : -

(1)  The applicant relied on the contents a number of notes passing from the Jury to the Judge after the Jury had retired to consider their verdict.  In support of the Applicant’s submissions that the Judge ought to have discharged the Jury on the basis that the Jury had already indicated it had reached a firm conclusion on the charges (a 5:4 split), reference was made to two notes in which it was stated ( as translated) : -

“Regarding some (fraud offences) we have not reached [addition: a majority] or unanimous consensus. Please direct (us). (i.e. 5:4)

Regarding the second count against D1, D2, D4, D5, D6, our conclusion up to now is 5:4, that is, (we) haven’t reached a unanimous verdict yet, as a result, (we) cannot even deal with the relevant money laundering offences.”

 (2)  Just by reading these notes, it is clear that the Jury had not reached a firm conclusion and was seeking assistance from the Judge.  This was how all counsel at the trial understood the position as well. The applicant’s counsel, who continue to represent her before us, had in relation to these notes submitted to the trial Judge that the directions regarding majority verdicts should be repeated.  Counsel for the other Defendants made  similar submissions and added that the Jury ought not to be pressed at that time (it was already past 8pm) to reach a verdict and should be allowed to rest for the evening.  Prosecution counsel was anxious that the Jury be allowed to rest.  Mr  Khattak for the Applicant did not object and agreed that the Jury ought not be pressurized. The Judge gave the directions as suggested and also said to the Jury that in view of the late hour, they ought to rest and resume discussion the next day.  There is nothing in this first point.

(3)  In relation to the secret communications aspect, two notes from the Jury were passed to the Judge after the proceedings had been adjourned to the following day and after she had dealt with the two notes referred to earlier.[6] The notes stated as follows (as translated):-

“Request to continue (our) discussion.

(Two deletions) Some juror(s) are unable to fall asleep here.

Request (deletion) to continue (our) discussion. ”

(4)  Unlike the previous notes, the Judge did not recall counsel to seek their views on these two notes.  Instead, she told the Jury that they should rest and resume their discussions on the case the next day.  The Court of Appeal was of the view[7] that in directing the Jury to rest until the following day, the Judge’s approach was “obviously reasonable and correct”.  We agree and would add that this was consistent with the position of all counsel as indicated above.

(5)  However, it is now said that the Judge ought to have recalled counsel immediately following the receipt of these two notes.  It was not enough for the Judge simply to have mentioned the existence of the notes the following day.  According to Mr Khattak, the two notes were not revealed to counsel the following morning either.[8]  The Judge only informed counsel that two notes had been received the previous evening requesting that the Jury be permitted to continue their deliberations.  The Judge said that she told the Jury to continue their discussions the following day since the case had already been adjourned.  None of the counsel requested to see the notes nor made any objections, presumably because no one saw anything wrong in the way the Judge approached the matter.  As the Court of Appeal remarked,[9] although it might have been better to have recalled the parties back to court, in the circumstances it was difficult to see how the Judge would have approached the matter differently had she done so.  Mr Khattak suggested to us that the non-disclosure of the fact that some of the jurors had difficulty in sleeping was material.  It was said that had this fact been known, there would have been an inquiry as to whether the Jury was feeling uneasy about being asked to adjourn their deliberations or there may have been personal worries on the part of jurors requiring further investigation.  Even question marks over the physical and emotional fitness of the Jury might have been raised.

(6)  In our view, these worries were entirely speculative and exaggerated.  After the Judge informed counsel of the notes the next day, there was no indication that the jury had experienced any particular difficulty or that issues about sleep had had any impact.  After being given further directions by the trial judge, the jury proceeded with their deliberations from 11:30 am to 3:57 pm on 19 December and a verdict was duly arrived at after such further discussion.  The Court of Appeal concluded that with hindsight, the Judge ought procedurally had recalled the parties, but in the circumstances there was no injustice and this did not constitute any reason to quash the convictions.  We agree.

10. Inconsistent Verdicts:-

(1)  The evidence against the Applicant and the other Defendants (including her husband, Hung Ching Kuen) was not identical.  The Court of Appeal dealt with these differences in their judgment.[10] There was also ample, certainly sufficient, evidence for the Jury to convict the Applicant.

(2)  There was no merit in Applicant’s submissions here.

11. The Judge’s ruling following the close of the prosecution case:-

(1)  The main issue regarding the fraud of which the Applicant was convicted was whether the financial institutions had been deceived by the 116 invoices which purported to show sales of goods by Hung Fu to Billion Up.  The relevant charge was made under s16A of the Theft Ordinance.[11]

(2)  The prosecution sought to demonstrate that the transactions as shown in the invoices did not exist.  The thrust of the defence case was that the invoices did reflect genuine transactions, albeit with completely different parties.[12] There was certainly ample evidence from the prosecution in support of its case, not least of all the compelling evidence that at no stage did Hung Fu sell any goods to Billion Up.  Mr Khattak invited us to go through the evidence at trial with a particular emphasis on what the defence case.  With respect, it is not permissible effectively to invite the Court of Final Appeal to evaluate the facts as a second tier appellate court.  The authorities to which reference has already been made, make this abundantly clear.

(3)  It was submitted by Mr Khattak that the trial Judge (and the Court of Appeal) had misunderstood the case against the Applicant, but with respect this was an unsustainable submission.  It was clear from start to finish just what the case against the Applicant was.  The evidence produced by the prosecution showed that under the invoices, the purported sales of goods from Hung Fu to Billion Up simply did not exist.  The trial Judge was perfectly aware of the defence case and, more important, just what the prosecution had to establish.  The Applicant’s counsel was also fully aware of this at trial.  In his submissions to the Court in support of the no case to answer application, he stated that the most important part of the fraud charge was whether the alleged transactions “in the invoices” were genuine.  The trial Judge was entirely correct in rejecting the submission of no case to answer.

(4)  There was no question either of the Court of Appeal misunderstanding the nature of the fraud charge.  There was therefore no question of the point identified to be one of great and general importance arising in the present case.

12. Inadmissible and prejudicial aspects of the expert evidence :-

(1)  The complaint here was that the forensic accounting expert called by the prosecution made observations on the accounting documents generated by the Defendants[13] which were outside the ambit of her expertise and therefore inadmissible.

(2)  It was certainly within the expertise of the accounting expert to highlight the unusual features of the defence documents.  For example, the expert regarded as suspicious, unusual or unreasonable the fact that on about ten occasions, the same invoice was used to apply for loans or the fact that some of signatures on such invoices were formed by cutting and pasting.

(3)  Many of the comments came during cross examination by the Applicant’s counsel.  As the Court of Appeal observed[14], no objection was made by counsel at the time.  Even if it could be said that it was inadmissible for the expert to make the observations she did (and we do not share this conclusion), they were obvious common sense conclusions that could be made.  All this fell far short of establishing that a substantial and grave injustice may have occurred.

13. Negative and highly prejudicial observations made by the Judge:-

(1)  This was essentially a submission that the Judge’s summing up was biased.  Her comments on two documents produced by the defence were said to be biased and highly prejudicial on the basis that the judge did not specifically to refer to the defence that was being run in relation to them.

(2)  However, as the Court of Appeal observed,[15] the comments made by the Judge were logical and overall, the directions given to the Jury’s were “comprehensive, correct and fair.” The Jury were directed on the evidence from both sides and were specifically told that they were not required to accept the Judge’s own views of the evidence.  Moreover, as Ms Lam submitted in her written submissions, the Judge did actually remind the Jury of what the Applicant had said in her testimony specifically regarding the two documents when the Jury sought guidance on them after they had retired.  No complaint was made at the relevant time by counsel for the Applicant.

(3)  Again, there is nothing of substance in the Applicant’s submissions here.

14. For these reasons, the application was dismissed.  As to costs, Ms Lam asked for costs against the Applicant.  At the hearing, it was indicated that submissions on costs should be made in writing following the handing down of these Reasons.  Accordingly, should the Respondent wish to ask for costs, written submissions should be lodged with the Registrar and served within 14 days of the handing down of these Reasons for Determination, with liberty to the Applicant to lodge and serve any submissions in writing within 14 days thereafter.  There will be liberty to the Respondent to lodge and serve written submissions in reply to the Applicant’s submissions within 7 days thereafter. At this stage, pending and subject to any submissions to be received, we are not inclined to make an order for costs, notwithstanding the recent decision in HKSAR v Koo Sze Yiu.[16]